The brouhaha surrounding the tax reform bill is a story in and of itself. Republicans trying to get a man accused of sexually assaulting teenage girls into office just for his vote? Check. Video of elected officials with their righteous anger standing up for the little guys? Check. Handwritten additions to the tax reform at the 11th hour because big business wasn't satisfied with their already extra-large cuts? Check. Senators claiming those of us who aren't inheriting giant chunks of cash are going without because we blow all our money on booze, women and movies? Check.
It's a mess, and if you're not one of the 1 percent (or a multi-million dollar corporation), chances are you're getting a whole lot of nothing.
So how does the bill potentially impact you and your taxes? Here are some major points of interest :
The House bill will allow religious organizations to endorse political candidates, something that was previously illegal under the federal Johnson Amendment. Every religious organization will be able to campaign and fundraise for elections and candidates.
The Senate version cuts taxes on private-jet-related fees, like staffing and maintenance. Great news if you have a private jet!
Both bills allow deductions for unborn babies, which is a step towards legal personhood for fetuses. That's dangerous territory for a lot of women's reproductive issues, like abortion.
The House version has a provision that makes tuition waivers for graduate students taxable income, while the Senate does not. Student loan interest will not be tax deductible. This is a hard hit to graduate students, who may be forced to pursue higher education overseas. Oh, and endowment gains for universities are now taxed, so expect college to get more expensive.
The married couple deduction is going up, but that increase is checked by reducing personal exemptions. Depending on how large your family is, this could be good or bad. Families without children will see an increase in returns, whereas families with two or more children will pay more .
Households who earn less than $75,000 will lose tax cuts by 2027 and will end up paying more.
While freelancers and contractors can still use itemized deductions, teachers who buy supplies for the classroom and civil servants who deduct their equipment will be hit hard by this.
Estate tax, one the hotly contended tax issues, will be removed. This makes inheriting easier and a whole lot less expensive . If you're not in line to inherit $5.5 million or more (which is where the inheritance tax kicks in), it's because you and your family were too busy blowing your money on booze, women and movies, according to Iowa's Senator Grassley.
This tax reform will add $1 trillion to the federal deficit in the next 10 years despite Republican claims. The "balanced" part of this balanced tax bill relies heavily on assumptions that cuts at the top will inspire economic growth (and that economic regulation overhaul will do the rest).
Right now the Republican party is pushing hard to finish their proposals, marry them, and push them through. President Trump has made it clear he wants it to get voted into effect by the end of the year, making the changes relevant to 2018 (and on tax returns filed early 2019). That's breakneck speed for such complicated legislation. Without proper time to weigh the potential consequences of hastily written (and in some cases, handwritten into the margins) tax code on some of the most important things in our lives, like healthcare legislation, all of the expected losses could just be the beginning.
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